Westwood One blamed lower demand for its products and services, increased competition and reduced audience levels for a drop in its revenue. It also said it may have to default on a loan.

Revenue fell 17.4% to $111.1 million compared to the same quarter a year ago. Revenue from national and local/regional ads fell about 24% and 12% respectively.

President/CEO Peter Kosann said the company was working hard to control costs. “Although the marketplace continues to be challenging, there are recent signs that demand for our programs and services will improve by the fourth quarter. We are beginning to see modest improvement in revenue pacing and are making selective investments in programming and infrastructure to best position the company for future growth.”

The company is hoping to finalize a new agreement with CBS Radio, hoping to show it to shareholders in the fourth quarter.

Revenue for the six months ended June 30 fell 13.2% to $225.2 million. For the year it expects its revenue to decrease in the high-single digits or low-double digits.

But it also stated: “As a result of the company’s expected outlook for the remainder of 2007, expected changes in covenant terms in its loan agreements and its existing outstanding debt balance, the company anticipates that within the next 12 months it may violate a loan covenant.”

Westwood One is working on options to avoid that. “While the company believes it will be able to avoid a default, it cannot provide any assurances that it will ultimately be successful if such a situation arises.”